WASHINGTON — After three regulatory relief bills sailed through the U.S. House of Representatives last week — two of which were written specifically for credit unions — industry insiders are cautiously optimistic.
Ryan Donovan, CUNA's SVP of legislative affairs, noted the three bills — allowing privately insured CUs to join the Federal Home Loan Bank system, giving CUs parity with banks on insurance for certain trust accounts, and establishing an appeals process to the CFPB if an area is not deemed "rural" — still have to make their way through the Senate.
"It is only one step in a long process, we are only halfway there," said Donovan. "But it is not every day we get one bill passed, much less two or three, so we are pretty happy."
Brad Thaler, NAFCU VP of legislative affairs said the trade group is "Still plugging away" with its lobbying efforts. He noted one day after the three bills passed, the House Financial Services Committee approved H.R. 3211, the "Mortgage Choice Act of 2013," a bill NAFCU has followed closely. "We are making some progress," Thaler said. "There is a recognition among members of Congress, and Chairman [Jeb] Hensarling noted that credit unions did not cause the financial crisis and they, as with community banks, are struggling with regulations."
Jeremy Empol, lobbyist and VP-federal government affairs for the California and Nevada Credit Union Leagues, said the CU community should be "very pleased" the House acted on the two specific parity bills for credit unions.
"For our members that wish to offer IOLTA accounts, this legislation is impactful in their ability to serve their members' needs," Empol said. "The same can be said about privately insured credit unions gaining access to the Federal Home Loan Banks. There is no reason for excluding credit unions from eligibility simply because they are privately insured. The House took a big step toward fixing this error."
Lynn Heider, VP of public relations and communications for the Northwest CU Association, said the House sent a "clear message" to the Senate that "is it time to work in a strong, bi-partisan fashion to provide regulatory relief to credit unions and to their members."
To Heider, the legislation "seems to be common sense." "It helps credit unions and their members get access to products and services in rural areas, allows members in privately insured credit unions to have access to affordable home loans, and provides federal protection on Interest on Lawyers Trust Accounts."
Mary Martha Fortney, president and CEO of the National Association of State Credit Union Supervisors, said it "certainly is positive" that Congress "recognizes the value" of credit unions across the country in providing valuable financial services.
"We are pleased to see movement on important legislation, which will expand access to credit in rural and underserved areas, deal with the IOLTA issue, and provide privately insured credit unions access to Federal Home Loan Banks," said Fortney
While two of the bills specifically addressed credit unions, the third pertained to a procedural element with the Consumer Financial Protection Bureau. CUNA's Donovan said the CFPB already was working on the rural designation issue.
NWCUA's Heider said the rural designation bill "shows an interest" by Congress to improve the working relationship between financial institutions and the CFPB "by ensuring the CFPB is open to input by credit unions."
John McKechnie, partner with Total Spectrum, a Washington-based advocacy firm, and a former longtime employee of both CUNA and NCUA, said he is "encouraged" by the House's actions.
According to McKechnie, it is important that Congress understand regulatory relief is important for all financial institutions. He noted bank lobbying groups oftentimes object to the credit union agenda, and said credit unions should "double down" on their efforts to make Congress realize banks will object on everything they do, and give credit unions regulatory relief when appropriate.
"If the banks ask for bank-specific measures to be passed, we need to continue to remind Congress that such efforts need to be paired with credit union legislation, as well," said McKechnie.
CUNA's Donovan said he hopes the passage of the three bills is a good sign."I think a lot of people on Capitol Hill realize credit unions are good things. We have a lot of friends up there," he said.
At the start of the current congressional session Rep. Hensarling asked what changes CUNA thought were needed, and Donovan said the trade group put roughly three dozen recommendations on the table.
"The big picture item was supplemental capital, then we had some specific suggestions regarding small business lending. Others were specific to the Federal Credit Union Act, such as the IOLTA act that was passed."
Modest Alone, Significant Together
Donovan said the proposals were "modest" individually, but collectively they would provide regulatory relief for CUNA members.
"The next step is trying to get the bills through the Senate. We have supporters for the private insurance bill and there has been discussions about the IOLTA bill for the last several years."
NAFCU's Thaler likewise said there is "recognition" in Congress that there is a need to provide regulatory relief to community-based financial institutions, including credit unions.
He said the IOLTA legislation is a "significant" credit union bill NAFCU has been seeking for a number of years.
"There is an environment to provide relief to credit unions in recognition of the good work credit unions did during the financial crisis," he said. "Obviously there may be times when legislation cuts across all financial institutions, but there is a little more appetite in Congress for providing relief to credit unions."
Still, Thaler, reminded, due to extreme partisanship on Capitol Hill at present there is a "challenge" to pass anything in Congress. As such, he predicted it will be a "broader challenge" to move the IOLTA bill through the Senate. Nevertheless, Thaler did not want to take away from the importance of getting the three bills passed in the House last week.
Fortney of NASCUS agreed it is "encouraging that credit union issues are being brought to the forefront."
"It definitely gives us hope that we can keep this momentum going as we tackle other important matters, such as supplemental capital and NCUA board reform," said Fortney
The California/Nevada CU Leagues' Empol said any time there is congressional action on legislation that improves the credit union charter, it has an "immediate effect" on the member, and ultimately the consumer.
"We are urging the Senate to act swiftly to pass these bills, and the president to sign them," Empol said. "As Congress sees the positive reaction from their constituents, hopefully the momentum will continue to drive other bills covering regulatory relief and charter enhancements — all which ultimately help credit unions change people's lives."
Empol said passing bipartisan legislation demonstrates to both sides of the aisle that credit unions are "willing and active partners" in changing the way Americans view financial services.
"Hopefully this will lead to future legislative victories," he added.
